As usual, a transcript of the
presentation for those that cannot (or choose not) to view the presentation is
below –

There's two real reasons that the top up arrangement can come into
effect.

The first one, and hopefully for most people, even in a post GFC
environment, is that the actual underlying asset has gone up in value.

So in other words, you end up with a gap between the amount that was
originally forwarded and the underlying asset value. So in that instance,
there is obviously a desire to ‘catch up’ that gap or to remove that gap and
that can be done by effectively recycling or regenerating a debt back to the
trust and then making sure that the mortgage arrangements are updated to catch
that additional amount.

The other reason that it might take place, and this particularly can arise
in relation to master trusts, is where there's a feeling amongst the family
unit that all arrangements are to be on a commercial basis.

In that instance, it's quite often the case that there are interest and
principal repayments. So in that scenario, you'll start to get a gap
between the level of security that the trust might have over the particular
asset and the debt that’s actually outstanding.

The critical point in relation to either of those scenarios, so in other
words the asset going up in value or the debt being reduced, or for that
matter, both things happening at once, is that whenever that gap is removed,
you will generally find that there is wealth being moved away from an at-risk
individual into a protected environment being the trust. Obviously in
that scenario, in each and every instance that it takes place, you've
potentially got to be aware of and advise the client, in relation to the
application of the bankruptcy clawback provisions.